MARKETBEAT SHANGHAI Capital Markets Q1 2021

QoQ 3-Mo. Market Activity Picks Up Chg Forecast The Shanghai capital market recorded 23 deals registering RMB18.3 billion in Q1 2021, down 12.3% from the previous quarter. 18.3 B Despite the decline in total volume, the market was still of interest to both domestic and foreign investors. Q1 Transaction Volume (RMB) In terms of real estate sectors, office assets remained in the top spot for the quarter, accounting for 35% of total investment. 4.2% Retail assets ranked second, with investment of RMB4.6 billion, followed by business park assets at RMB4.3 billion. A Office (CBD) Cap Rate significant retail deal was Link REIT’s 50% equity stake in Qibao Vanke Plaza for RMB3.2 billion. In the business park sector, 4.8% investment volume jumped by 175% q-o-q, with solid leasing activity in the Caohejing and Zhangjiang submarkets favored by Business Park Cap Rate investors. Of note, apartment assets comprised 7% of total transactions in the quarter. Shanghai Langqiao Trade, for example, bought Lanson Place Jinlin Tiandi Serviced Residences located in Huangpu Xintiandi Block for RMB1.35 billion. 4.3% Retail Cap Rate Strong Recovery In Foreign Capital Flow Shanghai has attracted significantly more attention from foreign investors in recent times, with the city viewed as a stable long- Source: Cushman & Wakefield term investment destination. Such foreign capital inflows recovered in Q1, with investment surging 658% q-o-q from the lows of Q4 2020 to reach a total of RMB7.8 billion.

ECONOMIC INDICATORS It is worth noting that the trend for diversification of investment property types in the Shanghai market has been further Q4 2020 strengthened. A number of investment institutions are now also turning their attention to logistics projects and alternative assets, such as data centers, due to the relatively high cap rate, combined with ongoing growth in e-commerce and online QoQ 12-Mo. technology related businesses and activity. Chg Forecast 1.7% GDP growth (YTD) TRANSACTION VOLUME BY INVESTOR TYPE TRANSACTION VOLUME BY SECTOR (Q1 2021)

2% 140 7% 1.7% 7% CPI growth 120 Office 100 35% Retail 80 3.2% 60 BP

10-year government RMB(billion) 40 Apartment bond rate 20 24% Industrial 0 2015 2016 2017 2018 2019 2020 1Q21 Mixed use Source: Shanghai Statistics Bureau, China Foreign Exchange Trade System, Oxford Economics Domestic Foreign 25% Source: Cushman & Wakefield Source: Cushman & Wakefield MARKETBEAT SHANGHAI Capital Markets Q1 2021

Outlook – Foreign Capital Expected To Show Continued Interest Compared with last year, foreign buyers are expected to boost their investment in the Shanghai capital market in 2021, as they actively seek investment opportunities in the market. Given the post-COVID-19 outbreak economic recovery and plans in place for continued economic transition and growth, interest in more diversified asset types is also expected to be shown from investors across the board – whether those assets are Grade A offices, business park offices, retail malls, industrial logistics facilities or alternative assets.

KEY SALE TRANSACTIONS (Q1 2021) PRICE PROPERTY LOCATION SECTOR VENDOR PURCHASER DEAL TYPE (RMB BN) Qibao Vanke Plaza 50% Qiaobao, Minhang Retail 3.20 GIC Link REIT Investment equity Greenland Bund Centre Huangpu Office 2.74 Greenland Zhongtai Securities Owner Occupation A2 & C2

Innove Star Zhangjiang, Pudong Business Park 2.36 D&J China Allianz Investment

Lanson Place Jinlin Tiandi Xintiandi, Huangpu Apartment 1.35 Zhongrong Group Langqiao Trade Investment Serviced Residences

Kangqiao Industrial Project Kangqiao, Pudong Industrial 1.00 Metersbonwe GAW Capital Investment

Hongqiao Jiahui Hongqiao, Minhang Office 0.51 New Changning Linhai Chengtou Owner Occupation

CAP RATE TREND Shaun Brodie Senior Director 6% Head of Occupier Research, Greater China Grade A Office (CBD) Grade A Office (Non-CBD) Business Park Retail [email protected] Alvin Yip President 5% Capital Markets, Greater China [email protected]

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